- Global economic growth should continue in 2019, despite headwinds from trade disputes, with positive momentum in the U.S. and mixed economic trends internationally.
- Strong earnings growth in 2018 and the recent market pullback make U.S. valuations attractive amid moderate economic growth.
- While European GDP growth should remain positive in 2019, major E.U. economies are seeing growth slow in the face of structural, cyclical, and political challenges.
- Asia’s economic outlook is mixed, as signs of slow but improving economic trends in Japan contrast with economic deceleration in China, but Asian markets stand to benefit as trade tensions ease.
- We favor U.S. sectors with both cyclical and secular tailwinds, like Information Technology and Communication Services, while avoiding more economically-cyclical and interest rate-sensitive sectors.
- An underweight to Europe reflects our expectation that economic growth trends are unlikely to improve in the near-term.
- We see better international opportunities in Asia, where modest growth expectations and low relative equity valuations have improved the region’s risk/reward profile.
• U.S. Consumer Staples
• U.S. Health Care
• U.S. Energy
• U.S. Industrials
• U.S. Utilities
• South & Central America